Why Ahmed Osman Guelleh’s empire is collapsing?

Hargeysa(Sayruuq) According to information obtained exclusively by the Indian Ocean Newsletter, the Djiboutian authorities have issued a warrant for the arrest of Ahmed Osman Guelleh, the boss of the local firm GSK Group. The lowdown on how a businessman was brought down by his disputes with the family of President Ismail Omar Guelleh.

A government campaign

According to our sources in Djibouti, on 23 September Ahmed Osman Guelleh fled with his family via Ethiopia to Somalia to put himself beyond the reach of Djiboutian justice. The government has urged all of Ahmed Osman Guelleh’s clients to initiate legal proceedings against him and has put particular pressure on Coubeche, which is run by the daughter of its founder Magda Remon Coubeche, who is also vice president of the Chambre de commerce de Djibouti (CCD). Haramous has also demanded the cancellation of his contracts in Djibouti, including those of his management and installation company, Equipment World, which provides services to the Camp LemonnierAmerican base.

Presidential offence

Ahmed Osman Guelleh’s disgrace is directly linked to an inheritance dispute with the presidential couple. The businessman was a partner in several projects with the former governor of the Banque centrale de Djibouti, Djama Mahamoud Haid, who died in 2013 and who was the brother of Djibouti’s first lady, Kadra Mahmoud Haid. In late 2015, she unsuccessfully laid claim to her brother’s shares in a number of buildings, and a few months later, the Banque pour le commerce et l’industrie-Mer Rouge, a subsidiary of BRED in which the Djiboutian government has a 33% stake, threatened to seize these buildings from Ahmed Osman Guelleh. However, the BCI-MR does not have the legal power to do so. In January 2016, the authorities suspended construction work on the East Africa Bank headquarters, which GSK was overseeing, on account of irregularities. As revealed in July by the Indian Ocean Newsletter, the boss of GSK was also at loggerheads with the Djiboutian tax authorities. The process of restructuring GSK’s debts with the BCI-MR served to reveal that the Djiboutian companies OGF Group and GSK had funded the creation of the agribusiness hub Somaliland Beverage Industries (SBI, Coca-Cola‘s sole franchise in the Horn of Africa) in Somaliland, as well as the construction of the company’s head office through their partners’ current accounts at a cost over four years of some $20 million. These current accounts were suddenly transferred to the ownership of Ahmed Osman Guelleh, and by transferring their financial assets to him, these foreign affiliates have reduced their profits in Djibouti and thus their tax bill too, leaving the Djiboutian tax authorities some $5 million out of pocket.

Commercial wars

Another aggravating circumstance is that Ahmed Osman Guelleh was also in dispute with Douda Tazwid Industries, a dairy and fruit juice factory in Damerjog (a region bordering Somaliland) that belongs to Ainache Guelleh, the presidential couple’s son. Ahmed Osman Guelleh was supposed to have installed new machines at the Douda factory, but is reported to have kept them for his own dairy facility in Somaliland and to have supplied Ainache with second-hand equipment instead.